The morality of mortgage rises

I have blogged about bad behaviour by the banks before. Only a few months ago I received a letter from my bank to say they were putting up the standard variable rate on my mortgage for no apparent reason. The letter didn’t say that last bit, but that was my conclusion.

I ranted about how evil they were. This big unrelenting superpower that can do what the heck it likes to little people like me. Cue Dr Evil-esque laughter.

And then I went on and paid the extra money every month.

Now, surprise surprise, they’re at it again.

Just when you resign yourself to the price of cucumbers going up from 80p to a pound in two of the major supermarkets in town – coincidence, I think not! – and the cost of getting the car through its MOT…

I’d even dealt with a debt collection letter from a grotty little outfit in Norwich whose first instruction in their missive was NOT to contact the company that had passed the debt to them (for a discontinued line that hadn’t been working for ages and unreceived demands – long story) as they were dealing with the amount owing, to which they had added 30 pounds for their trouble.

Well I did contact the phone company and they sorted it out so I only had to pay the original bill and they also said they’d deal with the cowboys in Norwich, although, granted, they didn’t call them that.

Message being that if you ever get one of these letters, deal in the first instance with the original company you may or may not owe money to. All debt collection agencies should be forced to say that in their initial contact letter. Very important advice. In fact, tweet it.

Anyway back to the banks. As it happens, my bank’s increase doesn’t actually affect me this time, but it is still a disgrace. Others have been worse. The Halifax increase is close to a 0.5 per cent rise to their standard variable rate. It will affect hundreds of thousands of already struggling families, be in no doubt about that.

And why a rise when there has been no Bank of England interest rate rises for over three years?

Something about the money markets, they say, and the cost of borrowing going up.

Hmm, call me old-fashioned, but shouldn’t a mortgage be funded by money that the bank already has in some shape or form. They lend it to you on the proviso that the property remains theirs until you pay it off. Pre-2009 the SVR was always 2 per cent higher than the Bank of England base rate which constituted the bank’s profit from the deal. I always thought that was fair and believed it to be standard practice, as though some unwritten law. Naïve, I know.

Since 2009 the SVR at my bank has been a law unto itself, around 4 per cent higher than the 0.5 base rate and now they’re slowly putting it up even before the Bank of England raise anything.

It is simply unacceptable that banks can do this without any comeback. Sure, it provides newspapers with powerful headlines for a day – ‘mortgage misery for millions’ etc – but other than that and the odd bit of commentary and analysis by people who probably have little mortgage worries, they move on to the next story. No campaigns or petitions demanding change. Nothing.

The underlying message here from these papers is: tough. Well, the banks provide very good advertising revenues so they don’t want to upset them too much.

But they deserve comeback on this. To say ‘oh it’s the money markets’ just isn’t good enough. You’ve already lent the money to the mortgage holders, it is in their houses. Clearly my bank is trying to claw back some of its recently announced losses by charging people more simply because they can. And I am saying they shouldn’t be able to.

The papers return to attacking the impoverished, the benefit cheats, the scroungers. Easy labels for people who are actually struggling to make ends meet and in a lot of cases don’t deserve to be tarnished in this way but hey, what can they do about it?

In actual fact, by putting up their rates with little explanation or justification, it is the banks who are the benefit cheats and scroungers in our society.

Forget labelling them as evil superpowers like some comic book villian. This kind of behaviour is the behaviour of real lowlifes. If the people running them were really made to feel thus, that what they were doing was morally and socially reprehensible, then maybe, just maybe, they would feel just a little more compelled in future to do the right thing.